11/24/08 6:25 AM

UNCLE SAM RUSHES TO HELP TROUBLED CITIGROUP.
The Osgood File. I'm Charles Osgood.

The federal government has unveiled a bold plan to rescue the troubled giant Citigroup, whose stock has been battered by short sellers.

SOT - Roben Farzad, senior writer at Business Week
"It's very important at this point with Citigroup being a three, four dollar stock that the government step in and not let it fall down that ditch..."

The plan calls for an immediate injection of 20 billion dollars, plus a federal guarantee to back hundreds of billions of Citigroup's enormous assets.

SOT - Roben Farzad
"It was until recently the biggest bank in the U.S. It has two trillion in assets on its balance sheet, and potentially another one-point-two trillion more that are kind of floating out there."

Roben Farzad, what is Citigroup --- and why does the government think it's so important?

SOT - Roben Farzad
"This is an enormous creature created ten years ago out of a mega-merger. It's been merging and acquiring its way ever since. It has 350-thousand employees, so we almost don't want to go there and ponder the imponderable."

You mean it's "too big to fail"?

SOT - Roben Farzad
"...'Too big to fail' --- and that's where you get into the vexingly difficult dilemma that is 'moral hazard.' Really, what is too big? What's that threshold? Because that inevitably tips over into things that the government didn't imagine."

Michael Keane thinks the government's plan should work.

SOT - Michael Keane, former Citibank consultant
"This should be effective in terms of stopping Citigroup from going bankrupt or stopping any prospective run on the bank."

Keane, a former Citibank consultant, now at USC's Marshall School of Business, says the government has to show leadership during this lame duck period between administrations.

SOT - Michael Keane
"Whether this puts more pressure on Washington to say: 'Okay, if we're now bailing out Wall Street again, shouldn't we be bailing out Main Street or our manufacturing base?' And I think that may build some political pressure there to do that as well, too."

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The Osgood File. Charles Osgood on the CBS Radio Network.
The Osgood File. November 24th, 2008.